Which of the following statements concerning a firm's quest to maximize wealth is correct?
A)In extremely competitive industries, we would expect firms would voluntarily engage in many socially beneficial projects to try to maximize their stocks' values.
B)Actions that maximize a firm's stock price are inconsistent with maximizing social welfare.
C)The concepts of social responsibility and ethical responsibility on the part of corporations are completely different and neither is relevant in maximizing stock price.
D)In a competitive market, if a group of firms does not spend resources making social welfare improvements, but another group does, in general, this will not affect the second group's ability to attract funds.
E)If government did not mandate socially responsible corporate actions, such as those relating to product safety and fair hiring practices, most firms in competitive markets probably would not pursue such policies voluntarily.

Question

Quizplus · Accepted Answer

The statement that if government did not mandate socially responsible corporate actions, most firms in competitive markets probably would not pursue such policies voluntarily is the only statement that is correct. The other statements are either incorrect or overly simplistic. While actions that maximize a firm's stock price may not always align with social welfare, it is also possible for socially responsible actions to also benefit a firm's financial performance. Additionally, the concepts of social and ethical responsibility are not mutually exclusive and can both be relevant in a firm's decision-making. Lastly, a group of firms that do engage in socially responsible actions may have an advantage in attracting funds in some cases.

Which of the Following Statements Concerning a Firm's Quest to Maximize